Bank of Guyana Governor Dr. Gobind Ganga has dismissed claims that there was a shortage of United States dollars locally, declaring that this country’s net reserves stood at over US$120 million up to Wednesday.
“There is no shortage,” Ganga told the Stabroek News when he was contacted on the issue, as he dismissed the complaints as a non-issue and referred this newspaper to local banks to verify.
Stabroek News was told that requests for foreign exchange at local banks was met with claims that there was shortage with the exception of Scotia Bank.
In addition to the complaints, businessman Terrence Campbell had highlighted on his Facebook page that he had been turned down by three banks.
However, checks by this newspaper with officials at Republic Bank, GBTI and Citizens Bank revealed that the banks had more than enough for transactions. “Shortage or influx? Whomever told you that must have not checked with us,” a source at GBTI said.
Over at Republic Bank, another said that “There was a little issue with wires but nothing to be alarmed about. There is no shortage per se.”
The Citizens Bank personnel noted that “once the customer met all the necessary regulatory requirements, we would facilitate because we do not have a forex shortage.”
Last week, Campbell, who is based in the United States, wrote on Facebook of his experience.
“In oil-rich Gubai (a fusion of Guyana and Dubai) improbably there seems to be a shortage of foreign currency. What could be the reason? Capital flight seems unlikely as this is Gubai and not Guyana of the 1970’s. Is capex spent by the public and private sectors so great as to cause a shortage? Has the failure to effectively address local content since 2015 led to extraordinary leakage from Gubai’s economy?” he questioned.
“Are the foreign conglomerates from countries like Trinidad and Suriname supporting their home operations with foreign exchange from Guyana? Whatever the answer, or combination of answers, the situation needs to be addressed as it could stoke inflation and make life for the person in the street unbearable. In Gubai, US dollars should, theoretically, be in such great supply that it threatens to increase the evident symptoms of Dutch disease. This shortage was totally unexpected,” he added.
Georgetown Chamber of Commerce and Industry President Timothy Tucker had replied to Campbell saying that there “are mixed reports, some banks have excess US and others have limited, but it’s a matter of the exchange rate.”
But the claims were dismissed by the Governor, who warned the business community of the dangers of making such claims without fact checking.
Ganga said that he has financial papers which show that all of the local banks “have enough for them to sell”.
In April of this year, the government had told this newspaper that the current influx of United States dollars and lower demand for the currency is the reason the Guyana dollar is holding at a steady exchange rate of US$1 to GY$200, and not that there is an appreciation.
Ganga explained that it is also why bank and wire transactions still attract exchange rates from $215 to $217 per US$1, positing that he did not foresee the spread decreasing anytime soon, given the cost that comes with having to ship foreign currency back overseas.
But compared with state and commercial banks in the region, Guyana’s spread on foreign bank and wire transfers is the highest.
With foreign currency flowing into the country from oil sales, the value of the local currency would be expected to rise. This year the equivalent of US$607 million is to be injected into the Consolidated Fund from oil proceeds.
